Australia and New Zealand Banking Group Ltd. v. APR Energy Holding Ltd., No. 1:17-mc-00216 (S.D.N.Y. Sept. 1, 2017) [click for opinion]

Plaintiff Australia and New Zealand Banking Group Ltd. ("ANZ Bank") filed suit in the United States District Court for the Southern District of New York to quash a non-party document subpoena served on it by Defendant APR Energy Holding Ltd. ("APR") pursuant to 28 U.S.C. § 1782. In granting ANZ Bank's motion, the court held that the United States Constitution's due process protections apply to so-called "section 1782 subpoenas" issued in aid of foreign legal proceedings or international arbitration. This meant the subpoena could not be enforced unless the court had personal jurisdiction over ANZ Bank. Based on the facts before it, the court found it lacked personal jurisdiction over ANZ Bank and therefore granted the motion to quash the subpoena.

ANZ Bank is incorporated and headquartered in Australia. Of its 1,127 branches and offices, only one is located in New York City. The New York branch employs 140 of ANZ Bank's 46,554 full-time staff, and accounts for approximately 2% of the bank's overall assets, operating income, and profits.

APR sought documents from ANZ Bank for use in a United Nations Commission on International Trade Law ("UNCITRAL") arbitration against the country of Australia arising out of alleged expropriation of private property in violation of the Australia-United States Free Trade Agreement. 28 U.S.C. § 1782 provides a mechanism to obtain such discovery: the district court may order a person who "resides or is found" in that district to give testimony or produce documents and other things for use in a foreign legal proceeding or international tribunal. The documents sought by APR related to four mobile gas turbines located in Australia that were leased to an Australian company that had declared bankruptcy in Australia.

The court began by noting that the United States Constitution's due process protections apply to the enforcement of a section 1782 subpoena. Moreover, the Second Circuit had previously held that a district court must have personal jurisdiction to enforce non-party discovery requests made under Federal Rule of Procedure 45. Finding "no meaningful distinction from a constitutional standpoint" between a Rule 45 subpoena and a section 1782 subpoena, the court concluded that it could not enforce APR's subpoena unless it had personal jurisdiction over ANZ Bank.

Applying the traditional analyses for determining so-called "general" and "specific" personal jurisdiction, the court quickly concluded that neither existed over ANZ Bank. That ANZ Bank had a single branch in New York did not equate to the sort of "continuous and systematic contacts" in the state necessary to create general personal jurisdiction. The court also rejected APR's argument that ANZ Bank had essentially consented to general jurisdiction by allowing its New York branch to be regulated under the International Banking Act of 1978, 12 U.S.C. §§ 3101-3108. The court relied on Second Circuit precedent that consent to general personal jurisdiction must be set forth in "express language" in the relevant statute or its implementing regulations.

Finally, the court concluded there was no basis to exercise specific personal jurisdiction over ANZ Bank or to order jurisdictional discovery to develop facts in support of such jurisdiction. The subject matter of the subpoena—relating to turbines located in Australia, purchased by an Australian Company that had declared bankruptcy in Australia—had nothing to do with ANZ's New York branch, and the specific documents sought were not located within the state. Under these circumstances, the court found no facts creating the necessary jurisdictional "nexus" between ANZ Bank's activities in New York and the underlying facts of the UNCITRAL arbitration.

For all of these reasons, the Court granted ANZ Bank's motion to quash APR's section 1782 subpoena.